Procurement Bill [HL] (HL Bill 4)

A

BILL

TO

Make provision about procurement.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 Key definitions

1 Contracting authorities

(1)In this Act “contracting authority” means—

(a)5a public authority other than an excluded authority, or

(b)in relation to a utilities contract, any of the following other than an
excluded authority—

(i)a public authority,

(ii)a public undertaking, or

(iii)10a private utility.

(2)In this Act—

  • “public authority” includes any authority with functions of a public
    nature that—

    (a)

    is funded wholly or mainly from public funds, or

    (b)

    15is subject to contracting authority oversight;

  • “public undertaking” means an undertaking that is not a public authority
    but—

    (a)

    is funded wholly or mainly from public funds, or

    (b)

    is subject to contracting authority oversight.

(3)20An authority is not funded from public funds to the extent that such funds are
provided in consideration of particular goods, services or works.

(4)An authority is subject to contracting authority oversight if the authority is
subject to the management or control of—

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(a)a contracting authority, or

(b)a board more than half the members of which are appointed by a
particular contracting authority.

(5)The following authorities are excluded authorities—

(a)5devolved Scottish authorities;

(b)the Security Service, the Secret Intelligence Service and the
Government Communications Headquarters;

(c)the Advanced Research and Invention Agency.

(6)An authority is a “devolved Scottish authority” if its functions are exercisable
10only in or as regards Scotland, and—

(a)none of its functions relate to reserved matters, or

(b)some of its functions relate to reserved matters and some do not.

A contracting authority that is a public undertaking or private utility is to be
treated as a devolved Scottish authority for the purposes of this Act if it
15operates only in or as regards Scotland, and—

(a)none of its activities relate to reserved matters, or

(b)some of its activities relate to reserved matters and some do not.

(8)In this Act, a reference to a devolved Scottish authority includes a reference to
an authority that is to be treated as a devolved Scottish authority for the
20purposes of this Act.

(9)This Act does not apply to Her Majesty acting in her private capacity.

(10)In this section—

  • “authority” includes person;

  • “reserved matters” has the same meaning as in the Scotland Act 1998.

2 25Public contracts

(1)A “public contract” is a contract of a kind specified in subsection (2), (3) or (4).

(2)Any contract for the supply, for pecuniary interest, of goods, services or works
to a contracting authority which—

(a)has an estimated value of not less than the threshold amount for the
30type of contract, and

(b)is not an exempted contract.

(3)Any framework which—

(a)has an estimated value of not less than the threshold amount for the
type of contract, and

(b)35is not an exempted contract.

(4)Any concession contract which—

(a)has an estimated value of not less than the threshold amount for the
type of contract, and

(b)is not an exempted contract.

(5)40Schedule 1 sets out the threshold amounts.

(6)Schedule 2 sets out contracts that are exempted contracts for the purposes of
this Act.

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3 Valuation of contracts

(1)For the purposes of this Act, the “estimated value” of a contract is its value for
the time being estimated by a contracting authority.

(2)A contracting authority that estimates the value of a contract must do so in
5accordance with Schedule 3.

(3)A contracting authority must not exercise a discretion in connection with
estimating the value of a contract with a view to securing that any requirement
of this Act does not apply in relation to the contract.

4 Mixed procurement: above and below threshold

(1)10Subsection (3) applies if, on award of a below-threshold contract other than a
framework, a contracting authority considers that—

(a)certain of the goods, services or works to be supplied under the contract
could reasonably be supplied under a separate contract, and

(b)that contract would have an estimated value of not less than the
15threshold amount for a contract of its type.

(2)Subsection (3) applies if, on award of a below-threshold contract that is a
framework, a contracting authority considers that—

(a)certain of the goods, services or works to be supplied under contracts
awarded in accordance with the framework could reasonably be
20supplied under a contract not awarded in accordance with the
framework, and

(b)that contract would have an estimated value of not less than the
threshold amount for a contract of its type.

(3)The contract is to be treated as having an estimated value of not less than the
25threshold amount for the type of contract.

(4)In considering whether goods, services or works could reasonably be supplied
under a separate contract, a contracting authority may, for example, have
regard to the practical and financial consequences of awarding more than one
contract.

(5)30In this Act “below-threshold contract” means—

(a)a contract for the supply, for pecuniary interest, of goods, services or
works to a contracting authority,

(b)a framework, or

(c)a concession contract,

35that has an estimated value of less than the threshold amount for the type of
contract.

(6)This section does not apply to a contract awarded in accordance with a
framework.

5 Utilities contracts

(1)40In this Act, “utilities contract” means a contract for the supply of goods,
services or works mainly for the purpose of a utility activity.

(2)In this Act, “utility activity” means an activity that—

(a)is of a kind specified in Schedule 4, and

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(b)is not carried out wholly outside the United Kingdom.

(3)In this Act, “private utility” means a person, other than a public authority or
public undertaking, that carries out a utility activity pursuant to a special or
exclusive right.

(4)5A person carries out a utility activity pursuant to “a special or exclusive right”
if—

(a)the person (whether alone or with others) has been granted a right to
carry out the activity pursuant to any statutory, regulatory or
administrative provision, and

(b)10that provision also substantially limits the ability of persons not
granted the right to carry on the activity.

(5)But a right to carry out a utility activity is not a “special or exclusive right” if it
is granted—

(a)following award under section 18 (competitive award), or

(b)15otherwise pursuant to a procedure in which—

(i)the opportunity to be granted the right was publicised widely
enough to avoid an artificial narrowing of competition, and

(ii)the grant of the right was based on criteria that did not favour
or disadvantage certain persons.

(6)20In this Act, a reference to a utility contract includes a reference to a framework
for the future award of contracts for the supply of goods, services or works
wholly or mainly for the purpose of a utility activity.

6 Defence and security contracts

(1)In this Act, “defence and security contract” means a contract for the supply of—

(a)25military equipment;

(b)sensitive equipment;

(c)goods, services or works necessary for the development, production,
maintenance or decommissioning of military equipment or sensitive
equipment;

(d)30logistics services relating to military equipment or sensitive equipment;

(e)goods, services or works for wholly military purposes;

(f)sensitive services or sensitive works;

(g)goods, services or works that are otherwise relevant to the operational
capability, effectiveness, readiness for action, safety or security of the
35armed forces.

(2)In this Act, a reference to a defence and security contract includes a reference
to a framework for the future award of contracts for the supply of goods,
services or works of a kind described in subsection (1)(a) to (g).

(3)A contract that is a defence and security contract only by virtue of subsection
40(1)(g) is not to be treated as a defence and security contract for the purposes of
Schedule 1 (thresholds for application of this Act).

(4)In this Act, “defence authority contract” means a defence and security contract
awarded by a defence authority.

(5)A “defence authority” is a contracting authority specified in regulations made
45by a Minister of the Crown.

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(6)A Minister of the Crown may only specify a contracting authority for the
purposes of subsection (5) if the Minister considers that the authority exercises
its functions wholly or mainly for the purposes of defence or national security.

(7)In this section—

  • 5“classified information” means information or other material which—

    (a)

    in the interests of national security, requires protection from
    unauthorised access, distribution, or destruction, or from other
    compromise, and

    (b)

    on the basis of those interests, has that protection under the law
    10of any part of the United Kingdom;

  • “decommissioning”, in relation to equipment, includes—

    (a)

    withdrawal of equipment from use;

    (b)

    disposal or destruction of equipment;

  • “development”, in relation to equipment, includes—

    (a)

    15research allowing for the development of equipment, and

    (b)

    development of industrial processes allowing for the
    production of equipment;

  • “equipment” includes any part, component or subassembly of equipment;

  • “maintenance”, in relation to equipment, includes—

    (a)

    20repair of equipment;

    (b)

    modernisation of equipment;

    (c)

    modifications to equipment;

    (d)

    installing equipment, including after its transport to a new
    location;

    (e)

    25testing equipment;

  • “military equipment” means equipment specifically designed or adapted
    for military purposes, including—

    (a)

    arms, munitions or war material, and

    (b)

    any of the military goods, software and technology the export
    30or transfer of which is controlled by virtue of Schedule 2 to the
    Export Control Order 2008 (S.I. 2008/3231), as amended from
    time to time;

  • “sensitive equipment” means equipment for use for security purposes
    where—

    (a)

    35the use or supply of the equipment may involve dealing with
    classified information,

    (b)

    the supply of the equipment requires access to a physical site or
    to other equipment as a result of which classified information is
    likely to be accessible to the supplier, or

    (c)

    40the equipment contains classified information;

  • “sensitive services” means services performed for security purposes
    where performing the services—

    (a)

    involves dealing with classified information, or

    (b)

    requires access to a physical site or to equipment as a result of
    45which sensitive equipment or classified information is likely to
    be accessible to the supplier,

    and includes the training of personnel to use sensitive equipment;

  • “sensitive works” means works undertaken for security purposes, where
    undertaking the works—

    (a)

    50involves dealing with classified information, or

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    (b)

    requires access to a physical site or to equipment as a result of
    which sensitive equipment or classified information is likely to
    be accessible to the supplier;

  • “supply”, in relation to equipment, other goods, services or works,
    5includes the development of the equipment, other goods, services or
    works for the purposes of their supply to the contracting authority;

  • “wholly military purposes” include—

    (a)

    the transportation of military personnel or military equipment;

    (b)

    the training of military personnel;

    (c)

    10the training of other personnel to use military equipment;

    (d)

    the construction of military facilities, including military
    airfields, military storage facilities or facilities for the
    maintenance of military equipment.

7 Concession contracts

(1)15In this Act, “concession contract” means a contract for the supply, for
pecuniary interest, of works or services to a contracting authority where—

(a)at least part of the consideration for that supply is a right for the
supplier to exploit the works or services, and

(b)under the contract the supplier is exposed to a real operating risk.

(2)20An “operating risk” is a risk that the supplier will not be able to recover its costs
in connection with the supply and operation of the works or services, where
the factors giving rise to that risk are—

(a)reasonably foreseeable at the time of award, and

(b)arise from matters outside the control of the contracting authority and
25the supplier.

8 Light touch contracts

(1)In this Act, “light touch contract” means a contract wholly or mainly for the
supply of services of a kind specified in regulations under subsection (2).

(2)An appropriate authority may by regulations specify services for the purposes
30of the definition in subsection (1).

(3)But an appropriate authority may specify services only if, having had regard
to the nature of those services, the authority considers that it is appropriate for
the award of public contracts for their supply to be exempted from the
provisions of this Act that do not apply to light touch contracts.

(4)35In having regard to the nature of services for that purpose, the authority must,
in particular, consider the extent to which—

(a)suppliers from outside the United Kingdom are likely to want to
compete for contracts for the supply of the services;

(b)the services are supplied for the benefit of individuals (for example,
40health or social care services) or the community generally;

(c)proximity between the supplier and the recipient of the services is
necessary or expedient for the effective and efficient supply of the
services.

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(5)In this Act, a reference to a light touch contract includes a reference to a
framework for the future award of contracts wholly or mainly for the supply
of services of a kind specified in regulations under subsection (2).

9 Mixed procurement: special regime contracts

(1)5Subsection (3) applies if, on award of a special regime contract other than a
framework, a contracting authority considers that—

(a)certain of the goods, services or works to be supplied under the contract
could reasonably be supplied under a separate contract, and

(b)that contract—

(i)10would not be a special regime contract, and

(ii)would have an estimated value of not less than the threshold
amount for the type of contract.

(2)Subsection (3) applies if, on award of a special regime contract that is a
framework, a contracting authority considers that—

(a)15certain of the goods, services or works to be supplied under contracts
awarded in accordance with the framework could reasonably be
supplied under a contract not awarded in accordance with the
framework, and

(b)that contract—

(i)20would not be a special regime contract, and

(ii)would have an estimated value of not less than the threshold
amount for the type of contract.

(3)The contract is not to be treated as a special regime contract for the purposes of
this Act.

(4)25Subsection (3) does not apply if the contract is a defence and security contract
and the contracting authority has good reasons for not awarding separate
contracts.

(5)In considering whether goods, services or works could reasonably be supplied
under a separate contract, a contracting authority may, for example, have
30regard to the practical and financial consequences of awarding more than one
contract.

(6)A “special regime contract” means—

(a)a concession contract,

(b)a defence and security contract,

(c)35a light touch contract, or

(d)a utilities contract.

(7)This section does not apply for the purpose of determining which is the
relevant threshold under Schedule 1.

(8)This section does not apply to a contract awarded in accordance with a
40framework.

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Part 2 Principles and objectives

10 Procurement only in accordance with this Act

(1)A contracting authority may not carry out a procurement except in accordance
5with this Act.

(2)In this Act—

(a)“a procurement” means the award and management of a public
contract, including any steps taken for the purpose of awarding or
managing the contract, and

(b)10references to a procurement include references to—

(i)a part of a procurement, and

(ii)where relevant, termination of a procurement before award.

(3)Accordingly, a contracting authority may only award a public contract in
accordance with—

(a)15section 18 (competitive award);

(b)section 40 (direct award in special cases);

(c)section 42 (direct award after switching procedures);

(d)section 44 (award under frameworks).

(4)In this Act, a reference to a contracting authority carrying out a procurement is
20a reference to—

(a)a contracting authority carrying out a procurement on its own behalf,
including where it acts jointly with, or through, another person other
than a centralised procurement authority, or

(b)a centralised procurement authority carrying out a procurement—

(i)25for or on behalf of another contracting authority, or

(ii)for the purpose of the supply of goods, services or works to
another contracting authority.

(5)In this Act, “centralised procurement authority” means a contracting authority
that is in the business of carrying out procurement for or on behalf of, or for the
30purpose of the supply of goods and services to, other contracting authorities.

11 Procurement objectives

(1)In carrying out a procurement, a contracting authority must have regard to the
importance of—

(a)delivering value for money;

(b)35maximising public benefit;

(c)sharing information for the purpose of allowing suppliers and others to
understand the authority’s procurement policies and decisions;

(d)acting, and being seen to act, with integrity.

(2)In carrying out a procurement, a contracting authority must treat suppliers the
40same unless a difference between the suppliers justifies different treatment.

(3)If a contracting authority considers that different treatment is justified in a
particular case, the authority must take all reasonable steps to ensure it does
not put a supplier at an unfair advantage or disadvantage.

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12 The national procurement policy statement

(1)A Minister of the Crown may publish a statement setting out the Government’s
strategic priorities in relation to procurement.

(2)In this section, “the national procurement policy statement” means the
5statement for the time being published under this section.

(3)Before publishing the national procurement policy statement, a Minister of the
Crown must—

(a)carry out such consultation as the Minister considers appropriate,

(b)make any changes to the statement that appear to the Minister to be
10necessary in view of responses to the consultation, and

(c)lay the statement before Parliament.

(4)A Minister of the Crown must withdraw the national procurement policy
statement if, before the end of the 40-day period, either House of Parliament
resolves not to approve it.

(5)15“The 40-day period” is the period of 40 days beginning with the day on which
the statement is laid before Parliament (or, if it is not laid before each House of
Parliament on the same day, the later of the days on which it is laid).

(6)When calculating the 40-day period, ignore any period during which
Parliament is dissolved or prorogued or during which both Houses are
20adjourned for more than four days.

(7)A Minister of the Crown must keep the national procurement policy statement
under review.

(8)The national procurement policy statement may be amended or replaced by a
subsequent statement, and this section applies in relation to any amended or
25replacement statement as it applies in relation to the original statement.

(9)A contracting authority must have regard to the national procurement policy
statement.

(10)Subsection (9) does not apply—

(a)to private utilities;

(b)30in relation to the award of a contract—

(i)in accordance with a framework, or

(ii)by reference to suppliers’ membership of a dynamic market;

(c)in relation to any devolved Welsh procurement arrangement or
transferred Northern Ireland procurement arrangement;

(d)35to a devolved Welsh authority or transferred Northern Ireland
authority, except in relation to a reserved procurement arrangement
(but not an arrangement of a kind mentioned in paragraph (b)).

13 The Wales procurement policy statement

(1)The Welsh Ministers may publish a statement setting out the Welsh
40Government’s strategic priorities in relation to procurement.

(2)In this section, “the Wales procurement policy statement” means the statement
for the time being published under this section.